Mon, 07 Jan 2013 | ADMINISTRATION
Reader's Digest has started to implement insolvency plans as part of its CVA for the direct marketing division.
The company was pushed to make three quarters of its UK direct marketing staff redundant last week after Jon Moulton's Better Capital private equity firm cut its support.
Better Capital rescued the magazine from administration less than three years ago, with promises to "return the business to its heyday."
However, cracks soon became apparent and Better has said that it has injected significant funds into the business "without adequate returns", prompting a reassessment of its assets.
A statement from the firm read: "Very substantial early cost-cutting enabled an improvement in profitability.
"However, a faster than expected decline in the business's direct marketing sales of CDs, DVDs and books has continued to make trading difficult. No easy route to long-term viability for the direct marketing business exists."
Reader's Digest had around two million readers in its 1990s heyday, but its circulation has fallen to less than 400,000 recently and many copies are even given away free of charge.
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